(RTTNews) - The euro rallied in early European deals Thursday as equities in the region are trading in positive territory after the Greece default fears eased. However, market participants and some analysts consider the current rebound is an upside correction.
European stocks moved higher after French PM Nicolas Sarkozy and German Chancellor Angela Merkel said in a joint statement that they are convinced that debt-ridden Greece will remain in the euro zone, easing fears of an imminent Greek debt default.
On its part, Greece agreed to follow through with its promise to dramatically cut government spending and raise revenues with an unpopular property tax to return to a path of lasting and balance growth.
Meanwhile, the Italian Parliament gave its final approval to a EUR 54 billion-austerity plan after watering down several of the proposals and adding some new ones like a sales tax hike and revised wealth tax in an effort to balance the country's budget by 2013.
Thus far, the U.K. FTSE 100 index advanced 1.6 percent, Germany's DAX rose 1.86 percent and France's CAC-40 index jumped to 1.80 percent.
In economic news, employment in Germany's manufacturing industry increased from last year in July, preliminary data released by statistical office Destatis showed today. Employment in manufacturing units with 50 or more employees increased 3.3 percent annually to 5.1 million in July.
The euro advanced to a 6-day high of 1.2095 against the Swiss franc, after having continuously stayed above the 1.20 peg rate more than a week. The euro-franc pair is presently worth 1.2085 with 1.2190 seen as the next likely resistance level.
The Swiss National Bank said today that it would enforce the minimum exchange rate of Swiss franc at 1.20 per euro, as decided on September 6, with the 'utmost determination'. Also, the bank said it is prepared to purchase foreign currency in unlimited quantities.
The central bank maintained its three-month Libor at zero as expected by economists. The bank also retained the sight deposits at the SNB at significantly above CHF 200 billion.
Meanwhile, the Swiss industrial production grew slower than expected in the second quarter, data from the Federal Statistical Office showed. Output grew 2.3 percent year-on-year in the second quarter, compared to expectations for a 2.7 percent increase. Industrial turnover grew 3.1 percent from a year earlier.
The common currency touched a 6-day high of 1.3791 against the US dollar, extending its 3-day winning streak. This was up almost 40 pips from previous day's close and more than 2 percent increase from Monday's new multi-month lows. The next upside target for the euro-greenback pair is likely to be seen around the 1.4020 level.
